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CareTrust REIT: The 11% Dividend Raise Is Music To My Ears

Jun. 01, 2020 10:27 AM ETCareTrust REIT, Inc. (CTRE)2 Comments


  • CareTrust is a growing skilled-nursing landlord with solid debt metrics and a strong base of operators.
  • Management has been proactive in helping its operators address the COVID-19 crisis.
  • With plenty of balance sheet flexibility, CareTrust can weather this crisis and continue growing in the near term.

Investment Thesis

CareTrust REIT (NYSE:CTRE) has seen its share of volatility over the past three months, hitting a multi-year low before recovering to the current price of $19.33 as of writing. While there has been plenty of headline risk surrounding skilled nursing facilities and seniors housing, CareTrust has managed this environment well with a relatively low infection rate in its facilities. With an active pipeline, solid debt metrics, and low payout ratio, I believe CareTrust shares are undervalued and offer compelling forward value as it returns to growth mode.

Brief Overview

CareTrust REIT is a healthcare property landlord with a geographically diversified portfolio of 212 properties spread across 28 states and 23 operators with triple-net leases in place. As of 3/31/20, the company had over $1.7 billion in property investments in skilled nursing facilities, Assisted Living Facilities and Independent Living Facilities, and Campuses that are comprised of SNF + ALF combined.

Currently, skilled nursing facilities make up 71% of the overall portfolio, while Assisted/Independent Living and Campuses make up the rest. Texas and California have the most properties with 39 and 34, respectively.

Source: Company Website

Quarterly Results

CareTrust REIT had a decent Q1 with FFO of $0.34 per share, representing a solid 6.3% YoY growth per share and reflecting the health of the overall portfolio. While there has been plenty of headline risk surrounding skilled nursing, things are not nearly as bad as they appear on the surface. With occupancy being the most relevant metric, the CEO did note on the conference call that overall occupancy had declined 370 bps in April due to a deferral of elective surgeries and fewer short-term Medicare patients a result. However, long-term Medicaid residents make up the bulk of CareTrust's SNF residents at 75% of total occupancy.

In addition, the government has waived the

This article was written by

Gen Alpha profile picture

I am Gen Alpha. I have more than 14 years of investment experience, and an MBA in Finance. I focus on stocks that are more defensive in nature, with a medium- to long-term horizon.

I provide high-yield, dividend growth investment ideas in the investing group Hoya Capital Income Builder. The group helps investors achieve dependable monthly income, portfolio diversification, and inflation hedging. It provides investment research on REITs, ETFs, closed-end funds, preferreds, and dividend champions across asset classes. It offers income-focused portfolios targeting dividend yields up to 10%. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in CTRE over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (2)

jgrever621 profile picture
All the work I have done on CTRE showed positive. Nice to see an author confirm my research. I find nothing wrong with ANY part of the financial statements, management, and its slow but steady growth away from reliance on Ensign. Quite well done; far better than most in similar situations.

I have been long here for a few years, DRIPing, and am rather fond of how management has performed.

I parted company with SNFs years ago, but kept this one only.
Gen Alpha profile picture
@jgrever621 thanks for commenting. I think the CEO is top notch as he was very open on the conference call and has a sound strategy in place.
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